What is a contract?
An agreement between parties that a court will enforce
* Contract and agreement are synonymous
* Foundation of every deal
* If what you want is not your idea and it’s not fair use, acquire it by a contract
Important basic elements of a contract:
- Terms
- Offer
- Acceptance
- Consideration
- Legal purpose
Explain terms:
provisions must be specific, not vague or ambiguous
*there must be a meeting of the minds between the parties
Explain offer:
A promise to do or not do something in exchange for value
Explain acceptance:
Clear, unambiguous acceptance of the offer without changing the terms
* if the recipient or offeree responds by changing the terms, that is a counter offer
Explain consideration:
What each party gives or receives
* The bargained-for exchange
* Doesn’t always have to be money
* There is no contract unless a court sees consideration
◦ If there is not consideration it will be considered a gift
◦ Gifts are not enforcable
Explain Legal Purpose:
The intent of the contract must be lawful (common sense)
T or F - Written contracts are required for any transfer of copyright ownership or any agreement that cannot be performed within one year
True! - Always get it in writing. Courts imply a covenant of good faith and fair dealing, but it’s required if the transfer cannot be performed within the year
Boiler plate
Standard terms and conditions
Example of what you would find in the boiler plate:
* work for hire language
* dispute resolutions/arbitration clauses
* Pay or play provisions
* very very fine print
Explain why companies put in dispute resolution/arbitration clauses in their contracts?
Companies have this because they don’t want to spend time, money, and publicity on court cases.
(Aidan’s words: they don’t want you to go to court because it’s expensive, it’s bad publicity, time)
T or F is very very fine print considered Boiler Plate in contracts?
True!
Remedies for Breach of Contract:
- Compensatory damages
- Restitutionary relief
- Liquidated damages
Explain Compensatory damages:
Compensation for actual economic loss. Much more common.
Equation:
expectation damages + consequential damages + incidental damages, - mitigation
* The math that every court will do if they are considering a breach of contract case
Explain Restitutionary relief
restores the injured party to the position they were in BEFORE entering the contract
Explain Liquidated damages
a pre-negotiated fee for breach by either party
* not dependent on proof of actual fault
* “It’s x amount of dollars if either party breaches”
* Typically provided by the seller against the buyers interests
* Liquidated = money/dollars where as the other two remedies can be much more broad
Understanding Expectation Damages
how the courts address the wrong
Loss in Value
Other Loss
Cost & Loss Avoided
The formula for expectation damages:
EXPECTATION DAMAGES = LOSS IN VALUE + OTHER LOSS - COST AVOIDED - LOSS AVOIDED
catering for 100 people, I pay 100000. cancel at last minute. I find another service that can only do 50 people for 50000. loss in value is 100000 of our breached contract. other loss could be reputational and refunds. cost avoided is that I covered my losses for half so i avoided losing 50% of the money.
T or F: court may also issue injunctive relief (a legal order that requires or forbids a specific action) in rare cases and will reduce damages if the injured party fails to mitigate its losses
True! in order to get injunctive relief you have to prove irreparable harm
Loss in value
“direct damages” - the gap between promised performance and what was actually received
Other loss
consequential and incidental damages for reasonably forseeable losses from the breach
◦ Incidental: if an actress gets sick from food provided
◦ Consequential: a whole day of shooting gets cancelled and thousands of dollars get lost because done actor was sick from the food
Cost & loss avoided
costs saved and resources reallocated (losses avoided) by the non-breaching party are subtracted from the award (what the non-breaching party is out of pocket for)
- ex. Asher finds a cheaper catering service upon having to last minute hire a new one
T or F - lawyers should be fully in charge of a producer’s negotiations
False! As producers, we’ve gotta control our lawyers. We want to control the negotiations.
Force majeure
a contractual provision freeing parties from obligations due to unforeseeable, uncontrollable events like natural disasters, war, or pandemics.
- every contract is cancellable if an act of god occurs and it has a force majeure provision
T or F big corporations will always crush the independent artist
True :(
